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Find the standard Deviations of these shares? Economy profitability Rate of Returns Decline 0.1 0.19 Normal...

Find the standard Deviations of these shares?

Economy profitability Rate of Returns
Decline 0.1 0.19
Normal 0.6 0.17
Growing 0.3 0.35
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Answer #1
State of Economy Probability of state of the economy [p] HPR [%] if the state occurs [r] E[r] = p*r d = r-E[r] d^2 p*d^2
Decline 0.10 19 1.90 $           -3.60 12.96 1.30
Normal 0.60 17 10.20 $           -5.60 31.36 18.82
Growing 0.30 35 10.50 $          12.40 153.76 46.13
22.60 66.24
Expected return 22.60%
SD = 66.24^0.5 = 8.14%
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